Just Say No to Software Licensing Audits

In my first few months as a CIO, I felt inundated by requests from an army of vendors. What I really wanted to focus on was learning the business, meeting my team, identifying our strengths and weaknesses, and determining how we should be organized to meet the business’s needs. Once I felt comfortable with those things, I’d be able to have an informed discussion with our vendors.

I realize that it was important for these vendors to build a relationship with me. Their sales teams needed to get a feel for what my strategy was going to be, my sentiment toward their product, and how they should begin to manage the expectations in their organizations in the event I was going to move in a different direction. Ultimately, the ones I wanted to work with were the ones who helped me identify and solve my problems.

I did not want to work with the ones that created my problems.

A few (yes, more than one) of our vendors began our relationship with the promise of a software audit, or true-up. One was at least clever enough to manufacture a problem so that they could help me solve it. According to their calculation we had consumed too much of their product. If I met with them to discuss renewal terms and they’d give me a deal that was too good to refuse.

I had participated in due diligence efforts for a true-up before. It always seems to be more difficult than it should be. Finding out how many times something has been installed across a fleet of desktops that aren’t always connected to the network, or how many times a piece of software has been deployed across different environments on different networks with different server configurations is complicated. While there are many tools that exist to help an IT organization get their arms around this, they are often introduced after systems have been established, and require laborious governance processes to keep current. Even when these processes are followed with the best of intentions, things fall through the cracks. Shadow IT, like it or not, often exacerbates this.

When the burden of proof is on the customer, it’s often cheaper to renew an agreement because it costs less than the audit process. Many traditional IT vendors know this. Some have made it their primary business model.

This is not how customers should be treated.

Cloud providers have moved the industry in a different direction. As we replaced on-premises solutions with cloud based ones we were able to secure predictable pricing based on usage. Usage is far more customer friendly than the dark arts of projecting licensing needs. The AWS console gave us complete and up to date transparency into our environment. In a few hours we were able to build our own dashboards on top of the AWS API’s to track things we cared about — like costs — as our environment changed. CloudWatch and CloudTrail gave us the ability to alert on events that would meaningfully impact our bill. At any moment of the day we had an accurate projection of our costs, even as our business needs fluctuated. AWS Trusted Advisor also served as an effective tool by advising us on additional ways to optimize costs out of our environment. None of our other vendors were proactively suggesting ways to save money, unless it involved buying more of their product.

Furthermore, the AWS Partner Network (APN) has a diverse set of tools that we leveraged to gain additional transparency. The AWS Marketplace gave us access to thousands of AWS compatible solutions with no long-term commitment and crisp terms. We were also able to license solutions indirectly through services like Amazon RDS. Since this time, both the size of the AWS Marketplace and the number of services that include or alleviate the need for additional licensing has grown dramatically. These tools both mitigate the risk of an audit and reduce time spent on procurement bureaucracy. This pace of innovation will only continue.

Governing use of software against licensing terms is expensive and hard to do well. The amount of time spent on software auditing and debating how to handle software auditing is an opportunity cost worth avoiding. We had enough motivations to begin experimenting with the cloud already — agility, reliability, costs, security — but now we had another. By paying only for what we were using, and knowing exactly what that was at any moment, we could move the traditional customer/vendor relationship toward a partnership in which we helped one another meet our goals.

Feeling like a hostage is unpleasant. In the case that began this post we did end up signing a smaller agreement, but only because we couldn’t remove their product fast enough. That time will come.

Devote more resources to building your business. Just say no to software audits.

Stephen Orban

Stephen joined AWS as Head of Enterprise Strategy in September of 2014. In this role, Stephen oversees AWS’ mass migration program, enterprise go-to-market strategy, and works with enterprise technology executives to share experiences and strategies for how the cloud can help them devote more of their resources to their customers. Prior to joining AWS, Stephen was the CIO of Dow Jones, where he introduced modern software development methodologies, reduced costs, and administered a cloud-first policy by leveraging AWS and other SaaS partners. These transformational changes accelerated product development cycles and increased productivity across all lines of business, including The Wall Street Journal, MarketWatch.com, Dow Jones Newswires, and Factiva. Stephen also spent 11 years at Bloomberg LP, holding a variety of leadership positions across their equity and messaging platforms, before founding Bloomberg Sports in 2008, where he served as CTO. Stephen earned his bachelor’s degree in computer science from State University of New York College at Fredonia. https://www.linkedin.com/profile/view?id=4575032